School financing options discussed
At a July meeting of the Charlotte County Board of Supervisors, Davenport and Company Representative R.T. Taylor was available to discuss school financing options for renovations in Charlotte County.
“I stand firm that we have to do something and we have to do something soon,” said Wylliesburg/Red Oak Supervisor Kay Pierantoni.
During the meeting, Davenport and Company proposed three possible options for school financing for the county.
A summary of school financing options said, “the county is considering a borrowing to fund improvements to its Bacon and Phenix Elementary Schools totaling approximately $3.2 million, plus costs of issuance.”
According to the summary, option one would require an extended credit through BB&T with a fixed interest rate of 3.72 percent.
No additional assets would be needed, as the existing collateral of Eureka Elementary School could be utilized.
In May 2017, according to the summary of school financing options, “Davenport distributed a competitive bank RFP in order to assess interest rates for viable financing options as it relates to the repairs and renovations to the Eureka Elementary School and various other schools, purchase new school buses and pay the costs of issuance, totaling $6.1 million.”
In July 2017, the board of supervisors and the school board approved financing with BB&T for a fixed interest rate of 2.60 percent over a 15 year period.
An issuance cost of an estimated $75,000 would be associated with option one.
Option two would include a competitive bank RFP process, which could take upward 60-75 days. The summary said the county/school system would also have to identify additional assets available to be pledged as security.
Issuance costs could run about $100,000 for this option.
Option three would allow the county to apply to and issue bonds through the 2018 VPSA fall pool. The application deadline for option three is August 27 and interest rates would not be set until VPSA bond pricing, occurring near Oct. 16.
The timeframe for option three could take approximately 120 days, according to the school financing options summary.
In addition, while options one and two would require a public hearing, option three would not.
“I think what we’re showing here is BB&T under option one provides you with a very … favorable result and it’s known now, so if that meet’s your timing parameters maybe that’s the way to go, but again, it’s up for ya’ll to decide,” said Taylor.
“Would it be fair to say that your opinion is option one would have less upfront fees? “Option two and three we’re going to encumber additional properties ..,” said Chairman of the Charlotte County Board of Supervisors Gary Walker.
He said BB&T is giving an idea of what can be done immediately.
Taylor said the costs of issuance under the BB&T option is lower by about $25,000 because anticipated services in light of the RFP process.
Pierantoni said the dilemma is that the county is aware that there are other needs.
“In particular one school is only getting a gym, and yet it has major needs” she said.
Pierantoni said the county has come to the conclusion that they will go with the community school option, however, the community schools are aging and have major needs.
“So we’re going to need more money,” she said. “This board knows that we are going to have to go and borrow more money because we have many needs.”
Pierantoni said in light of this, she is not sure why option one would even be considered.
Taylor said under option one since additional assets will not be encumbered, the $3.2 could be used to go ahead and get started on the project.
He said when any other additional projects are identified; there are still unencumbered assets available to go out to the banks with the next time.
“I’m not talking about a year from now …” said Pierantoni.
She questioned if option one is chosen, is it worth paying $75,000 in issuance costs to borrow the money then potentially have to pay another $100,000 to borrow additional money at a later date.
“We do have to pay this money,” said Walker.
However, Pierantoni said there is money in the county’s reserves that could be used.
“We are sitting on money,” she said.
Additionally, she said the county and the schools need to tighten their belts.
“I am not going to be quiet about Bacon …,” said Pierantoni. “Bacon school is going to get more. It needs to get more …”
Walker said the priorities were presented to the board of supervisors from the school board and in the last 15 months over $9 million has been appropriated for fixing issues with the schools.
“We haven’t raised taxes to pay for those yet and in my opinion we need to do that before we can determine how much more money we can afford to borrow. I’m not saying we don’t need to do the work …” Walker said.